Context
Over the last 15 years, two huge events have impacted all dimensions of Romania’s economic, political, and social life: the 1989 collapse of communism and of Romania’s autarkic regime and Romania’s drive to join the European Union.
Economic trends
In the 1990s the government of Romania’s commitment to reform, especially to economic reforms such as privatizing the large number of state-owned enterprises, was vacillating and ineffectual. By the end of the 1990s, real GDP was 83 percent of its 1990 level; the total poverty rate had peaked at about 36 percent, and the extreme poverty rate was 14 percent. In response to a greater commitment to economic reform, GDP finally regained and exceeded its 1990 level in 2001. By 2004 per capita income was estimated to have returned to its 1989-1990 level; poverty and extreme poverty had declined; inflation had declined dramatically; the banking sector was on firmer ground; and privatization of state-owned enterprises had accelerated.
Poverty trends
Even by 2002, 3 out of every 10 Romanians were poor and one out of 10, extremely poor. At the same time, there is a strong positive association
between economic growth and poverty reduction. Several variables predict poverty, but multivariate regressions show that the key correlate of poverty is education; Roma ethnicity and being unemployed are second and third in importance, respectively. Rural residents have more than double the probability of being poor than urban residents, and rural areas account for 67 percent of total poverty. However, controlling for types of primary income earners in the household virtually eliminates the poverty gap between rural and urban households, indicating that rural areas have a greater concentration of households with lower economic potential.
Employment
The dynamics and configuration of employment affect families’ demand for education. Since the transition Romania has seen the emergence of three perverse labor market trends: (1) migration of active workers into subsistence agriculture and other low-productivity/low-earnings activities; (2) declining participation in the labor force through retirements, early retirements, and discouraged workers; and (3) flows out of employment and into long-term unemployment.
Romania started the transition with the largest share of employment in low-skill agriculture among the central Eastern European countries, and its employment structure deteriorated in 2001 compared to the distortions observed in 1989. The lack of labor reallocation opportunities in the nonagricultural sectors has turned agriculture into the labor employer of last resort. Natural resources and unskilled labor also dominate (76 percent) the input composition of exports.
Romania’s employment structure and the factor intensity of its exports suggests that during the review period Romania straddled two stages of economic growth—factor-driven and investment-driven—and was in a low-skills, low-wage equilibrium. These realities imply a dampening effect on family and business demand for education and on the government’s motivations to reform education at least until the late 90s. Moving further into investment-driven growth and innovation-driven growth will accelerate business demand for skills and family demand for education.
Demographic trends
Between 1990 and 2035 the number of basic school age children is projected to decline from 3.3 million to 1.8 million—a 45 percent decline. However, most of this decline will have occurred by 2005, with the population of basic education age in 2005 being 37 percent less than it was in 1990. Although the basic school age population is projected to continue to decline until 2030, the downward trend is much more gradual between 2005 and 2030.
EU accession process
Romania applied for European Union (EU) membership in June 1995; its entry into the EU is scheduled for January 1, 2007. Government policies and actions are driven by the EU accession process, specifically by the EU’s Acquis Communautaire that is designed to bring new entrants’ practices in line with those of EU countries. The Acquis does not provide a coherent strategy for social policy issues, including health, education, and poverty reduction. It leaves these issues mostly to the individual countries.
The run-up to accession has consequently “crowded out” the government’s attention to a number of areas outside the Acquis that are critical for Romania’s sustainable development, including education. EU accession poses a significant unfinished education agenda for Romania, as evidenced by the fact that its 15 year olds performed poorly on an Organisation for Economic Co-operation and Development learning assessment particularly relevant to EU accession. About 70 percent scored below the level that seems required to function in a modern workplace, in contrast to 37 percent of EU 15-year-olds.
National Goals for Basic Education
Romania was among the first Central and Eastern European countries to initiate a comprehensive, large-scale education reform. Reform goals included introducing a flexible national curriculum, alternative textbooks, a
private textbook publishing industry, the teacher training required to change classroom practice, the head teacher/principal and school inspector training required to institute quality-focused management of the schools, a national assessment and examination service, and rationalized management of the school infrastructure and reducing the quality gap between rural and urban schools.
Commitment to the reform varied with the political party in power and the specific minister of education. The period of 1990-1995 was a clarifying phase, with the reform gathering force in the 1995-1999 period. The 2000-2003 period saw some reversal of the reform.
World Bank Support for Expanding and Improving Basic Education
The World Bank started helping Romania reform basic education from early in the transition. The Bank’s 1991 sector work showed that that the sector needed a comprehensive approach to reform, with key priorities being pedagogy and curriculum. This analysis led to a tightly connected set of projects: the Education Reform Project (ERP), approved in 1994; the School Rehabilitation Project, approved in 1997; a pilot focused on rural schools, funded by reallocating ERP funds; and a Rural Education Project, approved in 2003.
Summary of Recent Changes in Basic Education in Romania
Several players were involved in Romania’s basic education reform during the review period: the Ministry of Education and Research (MER), the Minister of Finance, Parliament, semiau-tonomous agencies and NGOs, local governments, school staff, parents, and students. They differed in their commitment to the reform and in the ”rules of the game” (formal and informal), the organizational infrastructure, and the skills and knowledge that they built to sustain and deepen it. For example, the semiautonomous agencies and NGOs provided the steadiest commitment to the reform and constituted its early technical leadership. Over the review period they built a cadre of professionals competent in curriculum design, educational measurement, teacher development, textbook quality, educational management, and rural education.
However, the MER still betrays a tension between the old concepts of command and control and those of providing policy frameworks and oversight. Accordingly, it still lacks capacities required to function effectively in its evolving role under decentralization: data on sector performance, policy analysis, evaluation, and strategic planning that are used in policymaking; a strong financial management capacity that can give the MER an advantageous seat at the table in Ministry of Finance budget negotiations; and a modern human resource management system.
Basic Education Outputs, Outcomes, and Their Implications for Household Demand
Enrollment and graduation rates for basic education
Romania started the transition with respectable gross enrollment rates for basic education and has managed to increase them steadily across the review period to about 100 percent. Total net rates are very close to gross rates; graduation rates from eighth grade are solid at about 96 percent but remained relatively flat from 1994–95 to 2003–04.
Enrollment rates vary by individual and household characteristics. Gender has no effect, and moving from the second through the top consumption decile has only a modest effect. Rural residence depresses enrollment rates, but the effect is not large, whereas other variables have significant negative effects: being Roma, being handicapped, being extremely poor or in a household in the lowest consumption decile, having no parent that has attained more than primary education, or coming from a household with a large number of adults or children 0–14 years of age.
Repetition and dropout rates for basic education
Consistent with the region, Romania’s repetition rates for basic education are low, stabilizing at around 3.5 percent. From 1990–91 to 2003–04 dropout rates, defined as the ratio between the difference in the number of students enrolled at
the beginning and at the end of the school year, remained at or below 1.5 percent.
Learning outcomes
The 8th grade (capacitate) and 12th grade (baccalaureate) exams, structured to measure the achievement of the curriculum’s learning standards by subject and grade, have respectable and relatively stable pass rates: each year about 90 percent pass the capacitate; and about 96 percent, the baccalaureate.
The international assessments (Third International Mathematics and Science Study [TIMSS] and PISA) show a more negative picture. Romania’s eighth graders participated in the TIMSS in 1995 (before the reform), 1999 (the reform was being vigorously implemented), and 2003 (conclusion of the 2000-3 period in which efforts were made to stop or reverse many aspects of the reform). Romania’s TIMSS results are virtually flat across the eight years, and Romanian students performed less well in mathematics and science for each of the three rounds than the average for all participating European and Central Asian countries.
It is not clear what the TIMSS series tells us about the reform. Romania’s reform could not have started to affect the schools until the curriculum reform started being implemented in the 1998–99 school year. Thus, there was no reason to have expected an effect for the first two rounds of TIMSS. “No effect” can also signal an unevenly or poorly implemented reform. From 2000 to 2003 the MER minister tried to reverse aspects of the curriculum reform, creating confusion at the level of the school that vitiated or clouded the learning impact of the reform. The problems with in-service training of teachers undercut the planned link between the new curriculum and teachers’ actual classroom practices. Finally, international evidence shows that student performance often drops in the first years of a major reform simply because any big reform is inevitably “messy” as teachers and students struggle to grasp its implications.
PISA is especially relevant to Romania’s aspirations to join the EU because it measures skills valued in innovation-based economies. Europe and Central Asian countries generally did not perform well on PISA, but Romania tested below the Europe and Central Asia Region average and well below the EU average. Particularly disturbing is that about 70 percent of Romania’s 15-year-olds performed below level 3—that is, at levels 0, 1, or 2. Scoring at level 3 or higher generally seems required to function in a modern workplace. EU students had double Romania’s chance of performing at levels 3–5 (63 percent).
Romania has a substantial amount of work to do if its schools are to create the human capital that Romania needs to compete economically in the EU and its citizens need to avail themselves of higher wage job opportunities in the EU.
Labor market outcomes
In 2004 the unemployment rates for primary education graduates are relatively low, which may be correlated with the low unemployment rates in rural areas. The most vulnerable to unemployment are those in the middle of the educational attainment distribution, that is, individuals with lower-secondary, some high school or high school, and vocational (secondary or post-secondary) education. However, multiple regression estimates do not yield much evidence that schooling is systematically correlated with the likelihood of unemployment, regardless of age.
The returns to an additional year of schooling across the period 1960–2000 are fairly flat between 1966 and 1989, but they more than doubled between 1989 and 2000. The data are not consistent with standard explanations of this upward trend, such as constrained supply of better-educated workers, product shifts, or skill-biased technical change. Under communism wages were compressed—that is, wages did not reflect variations in human capital. It is possible that the trend since 1990 simply signals the predictable decompression of wages that occurs with the introduction of prices.
Household demand for education
Household demand for basic education is generally high, as evidenced by enrollment rates, graduation rates, dropout rates, and learning performances on the eighth -grade examination. Demand is variable. Being Roma has an independent and highly negative effect
on demand, especially in urban areas. Although rural areas have lower enrollment rates than urban areas, it is characteristics of households more prevalent in rural areas, not rural residence itself, that depress demand.
World Bank’s Contribution to Sectoral Changes (1990–2004)
The Bank’s education lending has been coherent and highly relevant. The relevance of the Bank’s work in other sectors that affect education is another story. Every CAS since 1993 has supported education, but the education sector has needed intersectoral attention that thus far has failed to materialize—for example, public administration, public expenditure and financial management, decentralization, labor markets, and rural development.
Relative to the projects’ objectives, the Bank’s education assistance performed well except for teacher training, a problem that reflected more on the borrower than the Bank. Despite efforts in 2000-3 to reverse the reform, it has had measurable impact on concepts, incentives, and capacities. The Implementation Completion Reports (ICRs) assign solid ratings for outcomes, institutional development, and Bank performance; IEG ratings are consistent with or higher than those assigned by the ICRs. At the same time, the Bank significantly under-estimated the magnitude of conceptual changes (“habits of thought”) that European and Central Asian countries had to undergo if they were to establish market economies and democracies. The design of the ERP unfortunately did not include a sustained public relations campaign around its objectives. The concepts behind the reform were alien to players conditioned to a highly centralized command and control system.
Interviews with Romanian counterparts left no doubt that Romania’s basic education would not have made the progress achieved in the last 15 years without the consistent support of the Bank. One particular interview revealed the basis for these shared views:
It was not just the money that was important. If we learned anything, we learned it from the World Bank teams. These teams helped the country understand the concepts behind the project and helped us design and implement the project. This is a major difference between the Bank and other donors. Other donors usually send consultants who do their work and then leave. The World Bank, on the other hand, builds groups of Romanian specialists that can contribute to activities other than World Bank activities. Romania will need the Bank’s support even after Romania joins the EU. You can’t find the World Bank’s expertise in the EU. World Bank staff is highly committed and fine specialists…. There are only good lessons from the Bank.
Romania’s drive to join the EU raises the question of whether the Bank will continue to have a role in education in Romania. The Quality Assurance Group Country Lending Enhancement Review (World Bank 2004b) concluded, “After accession the social sectors—broadly defined—may be the most important niche for Bank involvement, as the substantial EU resources will be focused on other sectors.”
Lessons
- Firmness and flexibility need to be balanced in project negotiations.
- Complexity can advance implementation if the design is coherent.
- The Bank may have a role in sustaining project achievements.
- Creating new partners among NGOs and semi-autonomous agencies builds capacity that tends to be sustained.
- The government of Romania will need to exert more donor coordination, especially for Roma projects.
- Building support for reform is especially needed for projects with long time frames or those that are implemented under decentralization.
- The meso-level is important to successful education reform.
Conclusions
Although the Bank’s education team has had a significant and positive effect on Romania’s basic
education system across the 15 years reviewed, the overall Bank gets a lower grade. Heretofore, the Bank’s management has not solved the admittedly difficult “silo” problem that undermines the cross-sectoral collaboration needed to rationalize reforms of Romania’s education system.
The failure to include the sector in any completed or planned public expenditure reviews is inexplicable. The MER is struggling ineffectually with the sector’s fiscal issues, and neither the government of Romania nor the Bank has grounds for evaluating intersectoral allocations as they affect the education sector. The sector needs help with its fiscal framework for decentralization, but decisions here have to be aligned with a larger decision framework. The lack of a country team/government agreement on a rural strategy undercuts efforts to support rural education and the Roma that live in rural areas. The work on EU integration has done little to pursue the human capital demands of Romania’s integration into the Union—for example, rural-urban gaps in educational achievements or the implications of the PISA results.
The cross-sectoral problem is not unique to the education sector or to Romania. IEG and the Quality Assurance Group have conducted a number of country performance assessments that reveal that the Bank’s matrix system is not working well. The concept of the country team was expected to create cross-sectoral collaboration around agreed-upon problems that the country needed to solve. It has proved very difficult to make this concept work well.
There is agreement that even after Romania joins the EU, the World Bank has a role in education. Romania has skill-level problems to solve to enable its entry into the Union. It cannot afford to focus solely on the Acquis, ignoring factors outside of the Acquis that directly affect its chances of solving problems within the Acquis. Education is one of those factors. If the Bank’s management for Romania chooses to fill the vacuum created by the Acquis, the Bank has problems of intersectoral collaboration to solve if it is to help the country address challenges in the education sector.
